New Zealand's health providers in an emerging market

Services have almost completely replaced hospitals as the organisational units in the reformed New Zealand health care system. Within the secondary service provider sector service management, the decentralisation of general management to budget-holding clinical groupings has been an important factor in achieving a population focus, cost containment, accountability and integration. It is being further developed within the 23 newly formed Crown health enterprises (CHEs), the main providers of secondary, hospital and related services. The CHEs are evolving roles beyond a narrow definition of 'providers', taking initiatives to collaborate with other providers, or rejecting those elements of competition that might interfere with effective local co-ordination of services. Service management is also being extended to the demand-driven, fee-for-service primary care sector, where inflation-adjusted expenditure over the last decade has grown at more than 6%, compared with zero growth in the capitation-financed secondary sector. This is being achieved in both general practice and community budget-holder groupings through what might be called managed primary health care. The current health reform process has also created four regional health authorities (RHAs), responsible, within capped and capitated budgets, for the fully integrated purchasing of services from both primary and secondary providers. The success of these innovative arrangements, which could be of international significance, will depend upon the quality of the developing relationships between providers and their purchasing RHAs.